**Amendment
        No. 1 to**
 **LOCK
        BOX AGREEMENT**
 
 This
        Amendment No. 1 to Lock Box Agreement dated as of November 8, 2006 (this
        “Amendment”) is made by and among Smart Online, Inc., a Delaware corporation
        (the “Buyer”), Smart Commerce, Inc., a Delaware corporation (the “Company”), and
        certain former shareholders of iMart Incorporated, Inc. (the
“Sellers”)
 
 WHEREAS,
        the Buyer, iMart Incorporated, Inc., a Michigan corporation (“iMart”), and the
        Sellers previously entered into a Stock Purchase Agreement, dated October
        17,
        2005 (the “SPA”), the provided for, *inter
        alia* ,
        the
        establishment of a
        lock
        box agreement and account (the
“Lock Box Account”);
 
 WHEREAS,
        pursuant to the SPA, the parties entered into a Lock Box Agreement dated
        as of
        October 17, 2005 (the “Agreement”) establishing the Lock Box Account and certain
        procedures regarding payments to be made from the Lock Box Account
 
 WHEREAS,
        following consummation of the SPA and the Agreement, iMart merged with and
        into
        the Company, and the Company is successor in interest to iMart under the
        SPA and
        the Agreement;
 
 WHEREAS,
        the Company desires to enter into a certain loan transaction with Fifth Third
        Bank, a Michigan banking corporation (the “Bank”), pursuant to which the Company
        will grant Bank a security interest in its assets and establish a lock box
        agreement and account with the Bank (the “Fifth Third Account”);
        and
 
 WHEREAS,
        the parties wish to amend the Agreement to (i) extend the term of the Agreement
        and provide for advance payment of certain Installment Payments (as defined
        in
        the Agreement) and/or Noncompetition Payments (as defined in the Agreement),,
        and (ii) terminate the Sellers’ security interest granted pursuant to the
        Agreement and SPA.
 
 NOW
        THEREFORE, the parties agree to amend the Agreement as follows:
 
 1. The
        caption of the Agreement is hereby amended to delete the words “iMart
        Incorporated, a Michigan corporation” and add the words “Smart Commerce, Inc., a
        Delaware corporation” and each
        reference in the Agreement to “the Company” or words of like import referring to iMart
        Incorporated, a Michigan corporation, shall
        mean and be a reference to Smart
        Commerce, Inc., a Delaware corporation .
 
 2. Section
        1
        of the Agreement is deleted in its entirety and replaced with the
        following:
 
 “1. Deposit
        of Proceeds .
        The
        Company hereby agrees that all cash, checks, drafts and other instruments
        for
        the payment of money at any time received by the Company as proceeds from
        the
        operation of the Business (the “Proceeds”) shall be deposited into a lock box
        account as described in Section 2, below.”
  
  
 3. The
        following sentence is hereby added to the end of Section 2 of the
        Agreement:
 
 “On
        January 1, 2007, the Company shall initiate the process of having all Proceeds
        deposited in an account (“the Fifth Third Account”) to be opened with Fifth
        Third Bank, a Michigan banking corporation (the “Bank”). At such time as an
        audit determines that all Proceeds are being deposited in the Fifth Third
        Account, the Buyer and the Company will take all necessary steps to close
        the
        Lock Box Account.”
 
 4. Sections
        3(a), (c) and (d) of the Agreement are hereby deleted in their entirety and
        replaced with the following:
 
 “3. Disposition
        of Proceeds .
 
 (a) The
        Sellers shall be paid the Installment Payments and Noncompetition Payments
        according to the following schedule: (i) $1,329,518.00 upon the deposit of
        $1,550,000 by Buyer into the Lock Box Account as payment for the Installment
        Payments and Noncompetition Payments due on October 2, 2006 and partial
        Installment Payment due January 5, 2007, (ii) $707,977.08 on January 1, 2007
        as
        payment for the remaining Installment Payments and Noncompetition Payments
        due
        January 5, 2007, and (iii) $292,500.00 on or before February 5, 2007 as payment
        for all remaining Noncompetition Payments due in 2007. Such payments are
        to be
        made to the Sellers in the ordinary course of the Company’s
        business.”
 
 5. Section
        5
        of the Agreement is hereby deleted in its entirety and replaced with the
        following:
 
 “5. Term .
        This
        Agreement shall terminate upon the date all payments required under Section
        3(a)
        above have been made.”
 
 6. The
        security interest granted to Sellers under Section 3.2 of the SPA and under
        former Section 1 of the Agreement shall be fully released and of no further
        force and effect, and Sellers hereby understand and acknowledge that the
        Sellers
        have no interest in the Lock Box Account or the accounts or the monies in
        the
        Lock Box Account at anytime and all amounts deposited into the Lock Box Account
        are subject to a perfected security interest in favor of the Bank. Nothing
        contained in this Section 6, however, shall in any way be construed to limit
        the
        restrictions (for the benefit of Sellers) on the Company’s ability to withdraw
        amounts from the Lock Box Account contained in the Agreement, as amended
        hereby.
 
 7. Sellers
        shall execute and deliver to or for Buyer such additional documents and shall
        provide additional information as the Bank and Buyer may reasonably require
        to
        carry out the terms of this Amendment, including Section 6 hereof, and
        facilitate the certain loan transaction with the Bank.
  
  
 8. All
        parties acknowledge that the Lock Box Account shall remain in place as a
        matter
        of convenience only, and periodically at the sole discretion of the Bank,
        all
        amounts in the Lock Box Account in excess of any minimum balance required
        by the
        depository institution maintaining the Lock Box Account shall be transferred
        to
        and deposited in the Fifth Third Account.
 
 9. In
        the
        event of a conflict between the terms of the Agreement, as amended, and the
        SPA,
        the terms of the Agreement, as amended, shall govern. All remaining terms
        of the
        Agreement and the SPA shall remain in full force and effect; provided , however ,
        that
        Section 3.2 of the SPA shall be of no further force and effect.
 
 Each
        of
        the parties has caused this Amendment to be executed on its behalf by its
        duly
        authorized representative as of the date first set forth above.
 
 **SMART
                  ONLINE, INC.**
                
                
                
                By:
                  /s/ Michael Nouri
                Name:
                  D. M. Nouri
                Title:
                  CEO/President
              **SELLERS**
                
                
                
                By:
                  /s/ Gary Mahieu
                Gary
                  Mahieu**SMART
                  COMMERCE, INC.**
                
                
                
                By:
                  /s/ Michael Nouri
                Name:
                  D. M. Nouri
                Title:
                  President
              By:
                  /s/ Christine Mahieu
                Christine
                  MahieuBy:
                  /s/ Hak Jae R. Chung
                Hak
                  Jae Robert Chung